If you’ve been following the mortgage “buzz” lately, you might be hearing a lot about a “streamline refinance.” And if you’re an FHA loan-holder, this should definitely make your ears perk up a little bit! Keep reading to learn more….

Streamline Refinance

If you have an FHA loan, you might be applicable for a streamline refinance. This means that you can refinance your current FHA loan with a very simple process. Unlike the standard refis or even loan application process, streamlining your FHA loan means:

You do NOT need an appraisal on your home

You do NOT need to verify your income or employment

Your credit score will NOT be pulled

And if you’re like many other homeowners in America right now, this is probably sounding very appealing by now!

FHA Streamline Refinance Changes Coming in June 2012

The better news is that not only does an FHA streamline refinance make things easy, but changes are coming to save you even more money effective June 2012! Someone in Washington must have recognized the need for more FHA loan holders to refinance because changes are a’coming. Big changes that will make this process even easier for and save you thousands. Read our post here for specifics on the FHA program fee changes in 2012. But for a brief overview:

PMI payments can go down.

Up-front costs will be dropping to very, very minimal fees

You must have an existing FHA loan originated on or before May 29, 2009

As a local lender in Kansas City, I love to see programs rolled out like this. It’s helping many struggling to afford their mortgages (or looking for a break on their payments) to easily apply and take advantage of lower interest rates right now.

Please call me if you’re in the Kansas City area and my team and I will walk you through the FHA streamline refinance process!

We thought we’d offer a little mortgage help and recap some of the “Dos & Donts” when it comes to mortgages. (See our last years posts for more info.) It’s important to remember the same goes for refinancing – if you’re considering refinancing your home loan in the near future, it’s also advised you follow these guidelines:

Things to NOT DO Until you Have A Mortgage

1. Don’t buy or lease an automobile.

Lenders look at your debt-to-income ratio. A large payment like a car lease, or down payment on a car purchase, can greatly impact those ratios. You want your income to look as stable and steady as possible. Getting yourself into a new auto can impact those ratios and prevent you from qualifying for a loan.

2. Don’t move assets from one bank account to another.

A home loan process will require you to disclose the source of funds for each new account. If you transfer funds from one account to another, you might be opening up a complex process that you could easily avoid. The mortgage lender will verify each account as it currently exists. If you want to transfer funds, consolidate funds later.

3. Don’t change jobs.

If you know your future involves buying or refinancing a home, avoid changing jobs. If you switch jobs, your new job may involve a probation period which must be satisfied before the income from your new job can be used to qualify you for a home loan.

4. Don’t buy new furniture or major appliances for your new home.

We know it’s tempting to get that new couch, or fancy fridge, when you’ve been home shopping. However, if the new purchases increase the amount of your monthly debt, you could be disqualified from getting your home loan. Or even if you qualify, it could cut down on the available funds you’ll need to meet closing costs. We’re not saying don’t buy furniture – but wait until your loan closes to go shopping.

5. Don’t run a credit report on yourself.

We’ve seen this a lot – people will want to check their credit themselves before they call us to apply for a mortgage. However, if you check it yourself, it will show up as an inquiry on your mortgage lender’s credit report. Inquiries must be explained in writing. If you have the urge to visit Equifax, Trans Union or Experian websites – hold off. Let your lender run credit for you.

The lender can advise you if this needs to be done. This is for the same reasons mentioned in transferring assets and such. Sometimes it might be advantageous for you to combine bills and reduce payments, other times it creates a nightmare. Hold off and give your lender a call to get top advise.

7. Don’t pack or ship information needed for the home loan application.

You will need several documents for your home loan. Some include W2 forms, tax returns, divorce decrees, paycheck stubs, etc. If you’re packing, make sure to leave these important documents out. Duplicate copies can take weeks to obtain, and could push back your closing date.

8. Don’t open any lines of credit.

If you’re applying for a home loan, don’t open up any accounts that require a line of credit. This includes cell phones, store credit cards and even possibly gym memberships. Wait to get your extra 20% by opening up a new store card until after your home loan is closed.

Are you so far underwater in your mortgage that flippers and floaties can’t even help you? Then help is on the way through a HARP loan, and no we aren’t talking about little cherub boys playing soft music. The government has recently rolled out a program to help homeowners with conventional loans backed by Freddie Mac or Fannie Mae refinance their loans – even if they’re upside-down.

Hope for Homeowners To Refinance

With the housing drop, many homeowners found themselves in a tough spot. Some have been able to refinance their home loans with no problems, and get a rock bottom rate. But for others, no options existed because of the decline in home value and lack of home equity. For homeowners who bought their homes at the “peak” of the market, soon to find that their value had dramatically dropped, no refinancing options existed for them. That is, until now.

About the HARP program

HARP is designed to help homeowners refinance into a more affordable, stable mortgage, even if they owe more than their current home value. Just like any other refinancing situation, an underwriting and loan application applies.

Qualifying for HARP

Here are the criteria for the HARP loans:

​​​​Your mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.

The mortgage must have been sold to Freddie Mac or Fannie Mae on or before May 31, 2009.

​The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May 2009.

You must be current on your mortgage at the time of the refinance with a good payment history over the last twelve months.

To Apply for HARP

If you think you might qualify for the HARP program, contact your current lender to see if they participate in the HARP program. If your current lender doesn’t participate, or if you are looking for a Kansas City mortgage lender who participates in HARP, call me. We’ll get started on your paperwork today.

If you haven’t, you’re not alone. When many people think of how to save money on their home loan, they mainly go to the idea of refinancing into another 30-year mortgage. However, although the 30-year fixed loan is by far the most popular home loan on the market, several heads are starting to turn as the 20-year loan starts to emerge. The 20-year mortgage offers an amazing way to save money. Just look at the breakouts one man did on taking advantage of shorter term home loans.

What savings would come from refinancing your 30-year-fixed mortgage to a 20-year mortgage?

Knock 10 years off of the life of your home loan. (Especially if you’re in the home you plan to “settle down” – this is a great idea.)

Save thousands of interest (It’s amazing how much you’ll save from not paying interest on an extra 10 years of a loan.)

Take advantage of some of the lowest interest rates since 1951. (I mean we’re hitting around the 4%s, give or take some, which is unheard of.)

How to Refinance from a 30-year to a 20-year Home Loan

To get into a 20-year home loan, you’ll just need to go through the refinancing process. It begins with per-qualifying for a loan. You’ll need important paperwork like W2 stubs, employment letters, your financial breakouts, etc. If you work with a mortgage broker’s office, they can help you with a free mortgage analysis and determine the best route to take.

This may be the ticket to you saving thousands of dollars over the life of your loan.

Veterans who have served in active and non-active/retired military have the option of applying for a VA loan when purchasing a home. The VA home loan program is an advantageous program for veterans. It offers those who’ve served in the military the option of having competitive interest rates with zero money down for a home loan.

VA Loan Advantages:

Below are some of the key advantages of a VA loan…

Zero Down Payments with VA Loans

With a VA home loan, you do not need a down payment for your home loan. This is an advantage over the popular FHA loans, which require at least a 3.5% down payment.

100% maximum loan-to-value ratios on purchases & refinanced homes

With a VA loan, you can borrow 100% of the home’s value to purchase or refinance your home loan. This is better than the traditional 80% loan-to-value ratio that most conventional loans require.

No Private Mortgage Insurance (PMI) Required

Most homeowners dread paying mortgage insurance on FHA loans and conventional loans. With a VA loan, you do not have to pay PMI insurance, even with a zero down payment.

No pre-payment penalties on VA loans

On conventional loans, borrowers may be faced with penalties for pre-paying on the loan. If the loan is paid off entirely, the borrower may face a penalty for paying off the loan earlier than the term of the loan. FHA loans and VA loans do not have pre-payment penalties so that borrowers can pay back the loans as quickly as they’d like and not face any extra charges.

Relaxed qualifying standards in VA Loans

The application process for VA loans is more relaxed compared to that of a conventional loan. Standards for income, debt ratios, employment and more are more lenient. There are also options for those who’ve filed bankruptcy or have poor credit.

Competitive Interest Rates for VA loans

VA loans offer the same competitive interest rates as FHA loans and conventional loans. They are provided by private lenders like banks and mortgage companies, and receive the same competitive rates as all home loan programs. Veterans receive the same interest rates, but with additional advantages like no money down and no PMI.

Cash-out/debt consolidation refinance options

If you have several areas of debt such as car loans, student loans and credit cards, you may refinance your home with a VA loan and consolidate your debt into your mortgage payment. With lower mortgage rates now, this can save borrowers money, or at least allow them to pay off debt sooner. Those refinancing with a VA loan may also apply for a cash-out loan and take out extra funds to pay for home repairs, educational costs and more with the home’s equity.

Streamline rate reduction of existing VA loans

You can refinance your existing VA home loan with no out-of-pocket expenses! With low interest rates, several veterans are enjoying a lower mortgage payment through the streamline rate for VA loans.

Qualified VA loan assumption

Veterans who sell to other veterans have the option of VA loan assumption. The buyer can assume the loan if he/she is purchasing the home from another veteran, is an approved borrower, and the two veterans can agree on the terms.